Multitouch touch screen digitizers handle (2,3,4...) or more input fingers at a time at the hardware level.
Single touch devices handle only one finger at a time even if 2 or more are present. If you touch with a 2nd finger, the detected touch will "jump" from the first finger to the second finger location.
Install a touch screen visualizer or test application like Z device test. You can watch a video how it looks with one finger on youtube (which has fake dual touch and has some flaws).
So what a fake dual touch driver does is this:
It basically detects "jumps" of the finger and assumes it comes from a second and just keeps reporting a fixed virtual event (coming from the last known position from the (now vanished) 1st finger touch) while the 2nd touch is from your actual finger and reported regularly.